Focus on Medicinal Marijuana – Australian Producers Exporting to the World

Over the past 12 months, approximately 24 countries have either legalised or commenced the legalisation process for medicinal cannabis. The rapid acceptance of cannabis as a therapeutic may be directly correlated with an expansion of the global cannabis market that analysts expect will grow to a value of more than USD$55 billion by 2025.

Given the relatively small size of the Australian market for medicinal cannabis, the future of the local industry will likely depend on access to international markets. Therefore, the ability of Australian producers and manufacturers to export locally-produced medicinal cannabis products to countries such as Germany, the Netherlands and Spain is critical to the local industry.

Under recent changes made to the Narcotic Drugs Regulations 2016 by the Narcotics Drugs Amendment (Cannabis) Regulations 2018 (Cth), medicinal cannabis products may be exported under a licence and permit issued and held under the Customs (Prohibited Exports) Regulations 1958 (Cth). (Export is separately allowed with restrictions by a manufacture licence holder under the Therapeutic Goods Act or by another person who holds an export licence or permit under that Act, discussed below). These changes, which were expected to only permit the export of fully processed medicinal cannabis products, when read together with the definitions of “cannabis” and “cannabis resin” contained in the Narcotic Drugs Act 1967 (Cth), arguably extend to allow export of cannabis raw materials and seeds. While a number of restrictions remain in place to maintain domestic supply, lifting the ban on the exportation of medicinal cannabis products, particularly raw materials and seeds, clearly differentiates Australia from a number of other key jurisdictions, which will be a welcomed boost to the local medicinal cannabis industry.

Exporting medicinal cannabis from Australia

As of 8 February 2018, the Office of Drug Control (ODC) can issue licences and permits for the exportation of medicinal cannabis products under the Customs (Prohibited Exports) Regulations 1958. Medicinal cannabis products that are manufactured in Australia under a Good Manufacturing Practice (GMP) Licence can be exported under licence if they are listed as export-only and registered as such in the Australian Register of Therapeutic Goods (ARTG).

Importantly, the rescheduling of medicinal cannabis products within Schedule 8 of the Customs (Prohibited Exports) Regulations (which allows export of the scheduled substance under licence) refers to both “cannabis” and “cannabis resin”. Whilst the Customs (Prohibited Exports) Regulations does not provide a definition of “cannabis” or “cannabis resin”, the Narcotic Drugs Act 1967 (Cth) provides that “cannabis” and “cannabis resin” are to be defined according to the Single Convention on Narcotic Drugs. According to the Single Convention, “cannabis” means the flowering or fruiting tops of the cannabis plant (excluding the seeds and leaves when not accompanied by the tops) from which the resin has not been extracted, while “cannabis resin” refers to the separated resin, whether crude or purified, obtained from the cannabis plant. These changes effectively permit the exportation of raw plant material (i.e., cannabis flowers) and seeds (i.e., genetic material) from Australia.

Interestingly, according to the Guidance for cultivators and manufactures of medicinal cannabis published by the ODC in April 2018 (available here), the exportation of cannabis (e.g., flowers, leaves) or cannabis resin is said to not be permitted under the most recent Regulations. Further clarification of the scope of the legislative changes may therefore to be required to ascertain whether or not the export of raw materials, such as flowers and leaves, and resins is permitted.

The characterisation of cannabis as both a medicinal product and narcotic under Australian law means that the exportation of cannabis must satisfy the requirements of both the Narcotic Drugs Act 1967 and the Therapeutic Goods Act 1989 (Cth). Therefore, in order to export medicinal cannabis products, there are a number of legislative requirements that must currently be satisfied. In the first instance, the Therapeutic Goods Administration (TGA) requires that any finished medicinal cannabis product that is intended for exportation must first be entered into the Australian Register of Therapeutic Goods (ARTG); this ARTG entry may be either a standard registration, which permits both domestic and exported commercial supply or, alternatively, the listing may be for export-only. Furthermore, the ODC also requires that any producers of medicinal cannabis products have the appropriate ODC cultivation/manufacturing licences, ODC export licence and ODC export permits.

Post-February 2018, proposed exporters will also need to satisfy the TGA that any export will not preclude Australian patients having reliable domestic access to the medicinal cannabis product. This requirement will also now be a condition attaching to all manufacturing licences.

Holders of ODC cultivation/manufacturing licences issued prior to 8 February 2018 that wish to export medicinal cannabis products are required to apply to the ODC to vary those licences in order to satisfy the conditions required for exportation.

Other key export jurisdictions

Only a small number of other jurisdictions have legalised the exportation of medicinal cannabis products, including Canada, Uruguay and the Netherlands, with Israel intending to follow suit. However, the legislative frameworks for the exportation of cannabis and cannabis products in each of these jurisdictions are often complex and prohibit the exportation of raw cannabis products, particularly seeds. Furthermore, in the US, where cannabis is legal in some states but illegal at the federal level, the legal importation and exportation of cannabis to and from the US can be quite difficult as the national authority responsible for issuing import/export licences is required to comply with federal legislation.

In this context, it is clear that the approach adopted by the scheme enacted by the Australian Federal government provides both certainty for companies looking to cultivate medicinal cannabis and manufacture medicinal cannabis products for the domestic market, and also recognises and facilitates Australia’s capacity to become an export-base for medicinal cannabis, medicinal cannabis products and seeds.

Summary

Over the past 12 months, many countries have either legalised or commenced the legalisation process for medicinal cannabis. The rapid acceptance of cannabis as a therapeutic may be directly correlated with an expansion of the global market for cannabis products, with estimations that the global cannabis market will be valued at more than USD$55 billion by 2025.

The recent changes represent a welcome expansion of the medicinal cannabis regulatory framework, as they allow local producers and manufacturers of medicinal cannabis an opportunity to export their products, gaining access to a much larger international market.

If you have any questions about the exportation of medicinal cannabis products, our experts at DCC and DCCL will be glad to assist.